Page - 61 - in The Austrian Business Cycle in the European Context

61 6. Dating the business cycle Only part of the studies on business cycles restricts itself to co- movement analysis. Especially if studies are motivated by cyclical policy intervention (rather than by the identification of structural similarities), the dating of the business cycle is most important. The process of dating can be described as looking for turning points in the business cycle84• There is a difference between the definition of turning points in the classical context of business cycle analysis - where the object of study are the absolute levels of some time se- ries - and the interpretation of cyclical deviation. Figure 4 shows a stylised example of an economic time series - like GDP - consisting of a deterministic trend plus a cyclical variation. Figure 4: Turning points in the classical and the cyclical deviations approach Trend A Production (Trend+Cycle) Source: Own illustration. ll-4 In business cycle analysis turning points are defined in a different way as in ge- ometrics. Whereas the first mark local minima and maxima the latter is the point where a graph starts to change the sign of its curvature.